A worker on the production line of General Motors’ Vauxhall plant in Ellesmere Port in Cheshire.
Photograph: Bloomberg/Bloomberg via Getty Images

The owner of Peugeot and Citroën is close to completing a deal with General Motors to buy its European car brands Vauxhall and Opel.

Groupe PSA and GM could announce a deal as early as Monday morning after successful talks between the carmakers.

Negotiations about a potential acquisition were revealed last month and the board of PSA is now understood to have approved the deal.

The announcement of a deal will kickstart an brutal political battle between the governments of France, the home of PSA, Germany, the home of Opel, and Britain, the home of Vauxhall, to protect jobs and plants in their countries.

Carlos Tavares, the boss of PSA, has said the acquisition offered an “opportunity to create a European car champion”. The enlarged company could sell more than 5m vehicles a year but PSA is understood to be aiming to cut as much as €2bn (£1.7bn) in annual costs by combining Peugeot and Citroën with Opel and Vauxhall.

Vauxhall employs 4,500 workers across its UK production sites – at Ellesmere Port in Cheshire and Luton – and has a pension deficit of as much as £1bn. The scheme had a deficit of £840m at the end of 2014, according to regulatory filings, but analysts estimate that it could now be more than £1bn. John Ralfe, a pensions expert, said PSA would be “rip-roaring bonkers” to take on the pension scheme.

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Tavares has already held talks with Theresa May, the prime minister, Greg Clark, the business secretary, and Unite’s general secretary, Len McCluskey, about the deal. The PSA boss offered assurances about existing production commitments being met – meaning the UK plants would stay open until at least 2021 – and pointed out the company did not have a track record for shutting plants.

Cable said the German government was likely to be lobbying heavily to protect the Opel workforce and plants in the country. Roughly half of Opel’s 35,000 workers are in Germany.

Cable said: “I imagine there will be some ferocious German canvassing and it’s difficult to see what Britain can offer other than years of uncertainty.”

Nonetheless, the current business secretary has promised the government’s “unbounded commitment” to protecting jobs at Vauxhall. Clark told MPs in the House of Commons last month the government would “do everything we can” to protect Vauxhall.